Some people have fallen victim to confusing al-Taqiyya with hypocrisy, when
in fact they (al-Taqiyya and Hypocrisy) are two opposite extremes. al-Taqiyya is concealing faith and displaying nonbelief; while Hypocrisy is the concealment of unbelief and the display of belief. They are TOTAL opposites in function, form, and meaning.

The Quran reveals the nature of hypocrisy with the following verse:

"When they meet those who believe, they say: `We Believe;' but when they are alone with their evil ones, they say: `We are really with you, we (were) only jesting [2:14]."

The Quran then reveals al-Taqiyya with the following verses:

"A Believer, a man from among the people of Pharaoh, who had CONCEALED his faith, said: "Will ye slay a man because he says, `My Lord is Allah'?....[40:28]"

Also:

"Any one who, after accepting Faith in Allah, utters unbelief, EXCEPT under compulsion, his heart remaining firm in faith -- but such as open their breast to unbelief, -- on them is Wrath from Allah, and theirs will be a dreadful Chastisement [16:106]."

And also:

"Let not the believers take for friends or helpers unbelievers rather than believers: if any do that, (they) shall have no relation left with Allah except by way of precaution ("tat-taqooh"), that ye may guard yourselves ("tooqatan") from them....[3:28]"

Moreover:

And when Moses returned unto his people, angry and grieved, he said: Evil is that (course) which ye took after I had left you. Would ye hasten on the judgment of your Lord? And he cast down the tablets, and he seized his brother by the head, dragging him toward him. (Aaron) said: "Son of my mother! Lo! People did oppress me and they were about to kill me. Make not the enemies rejoice over my misfortune nor count thou me amongst the sinful people. [7:150]"

Now, we see that Allah (SWT) Himself has stated that one of His (SWT) faithful servants CONCEALED his faith and pretended that he was a follower of the Pharaoh's religion to escape persecution. We also see that Prophet Aaron (Haroon) observed Taqiyya when his life was in danger. We also observe that al-Taqiyya is CLEARLY permitted in a time of need. In fact, the Book of Allah instructs us that we should escape a situation which causes our destruction for nothing:

"and make not your own hands contribute to your destruction [2:195]"

This shows clearly that according to the the Muslim concept of right and wrong, (WRONG) hypocrisy is when an unbeliever lies about religion to a Muslim, and (RIGHT) Taqiyya is when a Muslim lies about religion to an unbeliever. In other words, it's impossible by definition for a Muslim to be a hypocrite. Taqiyya, on the other hand... if a non-Muslim believes a Muslim who downplays or conceals unsavory aspects of Islamic thought, then that merely shows how wonderful Allah is (at helping his believers deceive people).